December 5, 2015 – 11:35 am ET
SAN FRANCISCO (Bloomberg) — Billionaire activist investor Carl Icahn disclosed a new 12.1 percent stake in The Pep Boys-Manny Moe & Jack and said the auto parts and maintenance chain’s retail business should be acquired by Auto Plus — a competitor he controls.
Icahn believes Pep Boys’ “retail automotive parts segment presents an excellent synergistic acquisition opportunity for Auto Plus, a leading automotive aftermarket company wholly owned by” Icahn Enterprises LP, according to a 13D regulatory filing Friday.
Representatives for Icahn have “and intend to continue to have” talks with the company and others who “participated in the issuer’s strategic alternatives review process regarding potential transactions involving the issuer’s retail segment,” according to the filing.
Icahn’s interest in the automotive aftermarket runs deeper: He also holds a dominant 82 percent stake in Federal-Mogul Holdings Corp., which owns about 20 major aftermarket auto parts brands such as Champion Spark Plugs, MOOG steering parts, ANCO wiper blades and Wagner brake parts.
The move may put Icahn into competition with a unit of Bridgestone Corp., which agreed in October to buy the Pep Boys retail chain for about $ 835 million to combine with its network of tire and automotive centers across the U.S. The tender offer is set to expire on Jan. 4.
Auto Plus is an aftermarket parts supplier that Icahn acquired this year from Canada’s Uni-Select Inc. for about $ 340 million, and which he is using to drive consolidation in the industry. The company aims to be one of the largest automotive aftermarket companies in the U.S. in the next five years, according to its website.
Icahn’s Federal-Mogul, meanwhile, in October said it posted a net loss of $ 52 million on revenue of $ 5.6 billion during the first nine months of the year — down from net income of $ 17 million on revenue of $ 5.5 billion during the same period last year. The aftermarket business, known as the Motorparts division, said its nine-month operating earnings fell to $ 152 million from $ 168 million the year before.
It was not immediately clear how much business Federal-Mogul does with Pep Boys and Auto Plus.
Icahn Enterprises is a publicly traded master-limited partnership that holds stakes in the billionaire activist’s investments in industries including autos, energy, metals, rail cars, casinos, food packaging, real estate and home fashion. Icahn, 79, is worth about $ 21 billion, according to the Bloomberg Billionaires Index, and primarily invests his own fortune, rather than relying on money from outsiders.
Philip Nussel of Automotive News contributed to this report.
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